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Posts tagged ‘Life insurance’

King: Malaysian Flight Possibly Downed in ‘Suicide Plot’.


There is a “growing consensus” that missing Malaysia Airlines Flight 370 was crashed as part of a suicide plot by either its pilot or co-pilot, says Rep. Peter King, who chairs the House Counterterrorism and Intelligence Subcommittee.

U.S. authorities are coming to believe that one or the other of the pilots “wanted to get as far away and land in the farthest and deepest part of the ocean,” the New York Republican told the New York Post

The scheme, King said Sunday, could have been planned in the hopes that family members would be able to collect life insurance on the pilot or co-pilot, because if the plane isn’t found, “they can’t call it suicide.”

Malaysian police are denying reports that the family of the pilot, Capt. Zaharie Ahmad Shah, moved from their home just days before the flight took off. Two different photos of surfaced of him. One shows him wearing a shirt with the words “Democracy is Dead” printed on it, while the other shows him holding a cleaver and standing with a bowl of meat.

He is also being described as an “obsessive and fanatical” follower of Malaysian opposition leader Anwar Ibrahim, whom authorities sentenced to five years in prison for homosexuality in the hours before Flight 370 departed. 

The suicide plot scenario “makes the most sense,” King said Sunday. Authorities believe the plane headed south toward the Indian Ocean, one of the deepest in the world, after it went off course over the Gulf of Thailand.

“If there is any consensus now, it’s that it was a suicide by the pilot or co-pilot, and he wanted to go as far as he could into the Indian Ocean,” King said, expressing doubt that both pilots were involved in the plan.

“One or the other would have to kill or somehow silence the other,” King said. 

According to Malaysian Police Chief Khalid Abu Bakar, authorities are still investigating all possibilities, including hijacking or sabotage. 

Last week, King told “The Steve Malzberg Show” on Newsmax TV that the jet’s disappearance had the hallmarks of terrorism.

There’s “the fact that you have a two passengers flying on stolen passports, the fact that the plane just disappeared, that there was no communication whatsoever, the fact that Malaysia is known to be a hotbed of al-Qaida activity in the past.”

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© 2014 Newsmax. All rights reserved.

By Sandy Fitzgerald

Orrin Hatch Pushes Plan to Reform Public Pensions After Detroit Bankruptcy.


Image: Orrin Hatch Pushes Plan to Reform Public Pensions After Detroit Bankruptcy

Senator Orrin Hatch is pushing an overhaul of public pensions that would let life insurers grab a bigger share of the $3 trillion in state and local funds, a potential windfall for companies such as MetLife Inc. and Prudential Financial Inc.

Public pensions invest their money with asset managers and use gains to help pay benefits. Under Hatch’s proposal, they could choose to give their funds to insurance companies, which would take responsibility for making payments when workers retire. The Utah Republican has seized on Detroit’s July 18 bankruptcy to highlight budget deficits and ballooning debt that threaten payouts by municipalities.

Taxpayers and workers pumped more than $126 billion into public retirement systems last year, Census data show. Hatch, the top Republican on the Senate Finance Committee, says shifting investment risk to insurers will make the pension system stronger and more efficient, even as the industry’s financial vulnerability was exposed by the credit crisis five years ago and the record-low interest rates that followed.

“Senator Hatch’s plan is built on false assumptions,” said New York City Comptroller John Liu, who oversees the city’s $137 billion retirement system and is running for mayor. “Public pension funds are far more cost effective and secure than for-profit insurance companies, which have to answer to shareholders first and not the pension beneficiaries or taxpayers.”

Insurance Contracts

Hatch’s plan calls for workers to receive a type of insurance contract called a fixed annuity that guarantees employees on retirement a lifetime stream of income in exchange for upfront payments. They can only be issued by licensed insurance companies, which are regulated by states where they do business. Public pensions are primarily overseen by state laws, local ordinances and IRS rules.

The bill would give insurers a new avenue of growth as they’ve struggled to properly price annuities amid rock-bottom interest rates and stock-market swings, and as investment firms including Leon Black’s Apollo Global Management LLC and Phil Falcone’s Harbinger Group Inc. have entered the business. It would also boost sales of a relatively new insurance product known as a deferred-income annuity, which can accept multiple premiums during a career and guarantee lifetime payouts at a future date.

‘New Business’

“I know some will argue my bill will give too much new business to the life insurance industry,” Hatch said in a statement. “The way I see it, my bill takes advantage of the life insurance industry to help Americans solve a serious pension problem.”

While Congressional gridlock renders it unlikely that Hatch’s bill will pass this year, it shouldn’t be dismissed, said Derek Dorn, a partner at Davis & Harman LLP in Washington who specializes in tax and retirement policy. Hatch would have a chance to push the bill should his party gain the majority in the Senate after the 2014 elections.

Hatch’s plan would raise costs for public workers and increases the potential for “other AIG-type situations,” said Dean Baker of the Center for Economic and Policy Research, which gets money from unions. American International Group Inc., once the world’s largest insurer, got a $182.3 billion taxpayer- funded rescue in 2008. Hartford Financial Services Group Inc. and Lincoln National Corp. also received rescue funds. The companies have repaid the aid.

There is precedent for losses from insurance company busts. Executive Life Insurance Co., at one time the largest life insurance company in California, collapsed in 1991 under a load of junk bonds, spurring losses for some policyholders.

Insufficient Contributions

Hatch’s proposal doesn’t address a key weakness in the public pension system: the past underfunding by state and local governments that routinely failed to set aside enough money for benefits in order to free up money for other programs. Many municipalities were forced to pump more money into retirement plans after the 2008 financial crisis. The move by Detroit to file for the biggest municipal bankruptcy in U.S. history may cut retirement benefits of 30,000 current and former workers.

“Where we have pension-funding issues in the public sector, it’s not because of exposure to risk,” said Steven Kreisberg, collective bargaining director for the American Federation of State, County and Municipal Employees. “It’s simply because employers have failed to make contributions that they should have made.”

Investment Assumptions

Public pension benefits in the U.S. are administered by 2,500 retirement systems, covering 15 million working and 8 million retired employees, according to Census data. Most have struggled to meet their retirement liabilities as assumptions that their investments would earn 8 percent a year have proven to be too high. In 2012, contributions from public agencies were only about 80 percent of what they should have been to ensure that there will be enough to pay out all the promised benefits, according to the Center for Retirement Research at Boston College.

The bill is designed to prevent public agencies from underfunding their pensions in the future by letting them buy annuities for workers upfront, according to Hatch’s office. That would force the funds to recognize the full cost of those liabilities and prevent them diverting money to other projects, which means the number of states or municipalities opting to do it “will be precisely zero,” said Jeffrey Brown, a finance professor at the University of Illinois.

The bill makes it easier for state and local governments under the federal tax code to shift the risk of future pension benefits to workers from taxpayers, which may help it gain support, said Ben Harris, senior research associate at the nonpartisan Tax Policy Center.

Compromise Possible

“There may be room for compromise,” Harris said. “Senator Hatch and the White House are both looking at ways to induce employers to offer lifetime income or annuities to workers.”

The Treasury Department proposed regulations last year to make it easier for people to fund an annuity through their company-sponsored pensions or 401(k) savings accounts in an effort to help retirees from outliving their savings.

Under Hatch’s plan, a worker in a public pension would receive a deferred fixed-income annuity contract for each year of service, funded by their employer. Fixed annuities provide a set payout based on current interest rates, the longevity expectations of a pool of workers and other assumptions. Participation by states or municipalities would be voluntary.

‘Looming’ Crisis

Insurers would have to bid annually and offer institutional prices, according to the legislation. Workers would be able to take their benefit guaranteeing future monthly income from job to job. A 30-year employee would have 30 policies at career end, possibly from different providers.

“With cities and municipalities across America – from Chicago to Los Angeles -facing a looming pension crisis, Congress should act now to stop another city bankruptcy,” Hatch said in an e-mailed statement.

Hatch’s pension plan is part of a broader legislation aimed at the U.S. retirement system. Apart from public pensions, the bill also proposes a plan for “Starter 401(k)s” to make savings plans available to more workers at small employers.

Fiduciary Standards

The legislation also weighs in on the battle over the Department of Labor’s efforts to boost financial advisers’ accountability to retirement-plan participants. The bill would strip jurisdiction over prohibited transactions involving self- dealing and conflicts of interest in individual retirement accounts from the Labor Department, which has been pursuing more stringent rules to protect investors, and place it solely with the Treasury Department.

Treasury also would work with the Securities and Exchange Commission in determining professional standards for brokers and advisers for IRA participants.

The Labor Department has been working on a rule since 2010 that would expand the list of those who are liable in retirement plans as a so-called fiduciary. The brokerage industry has lobbied against the Labor Department’s proposal.

Insurers currently play a limited role in public pensions, said Keith Brainard, research director at the National Association of State Retirement Administrators. Some public pensions may outsource disability or death benefits to an insurance provider, he said. Some insurers also act as fund managers for pensions, providing investments in assets such as stocks, bonds and real estate.

BlackRock, Pimco

The vast majority of public pension money is dominated by money managers such as BlackRock Inc., Pacific Investment Management Co. and Vanguard Group Inc., which are selected by the retirement systems. Pensions use these managers to invest in stock and bond markets, as well as non-traditional strategies such as hedge funds, private equity and real estate. Prudential’s investment unit is the only insurance company among the ten biggest institutional-investment managers, according to data from Pensions & Investments magazine.

Hatch’s plan would expand pension assets held by the insurers, which in the past year have taken over retirement liabilities from companies such as General Motors Co. and Verizon Communications Inc.

General Motors struck a deal to shift more than $25 billion in pension obligations to Newark, New Jersey-based Prudential last year. In October, Verizon reached a similar deal to shift about $7.5 billion in pension liabilities to Prudential.

Purchasing annuities will make pension costs for states and municipalities more predictable and help insurers increase revenues, Rokhaya Cisse, an associate analyst at Moody’s Investors Service, said in a July 15 note. The largest life insurers with existing retirement businesses are likely to benefit the most, Cisse wrote. MetLife and Prudential are the largest U.S. life insurers and both sell retirement products.

Wall Street

The plan may also benefit Wall Street firms that have been making acquisitions to expand in insurance. Private-equity firm Apollo, based in New York, and a firm tied to New York- and Chicago-based Guggenheim Partners LLC reached deals in December to buy U.S. annuity units. A firm owned by Guggenheim shareholders on July 31 received approval to proceed with the deal to buy Sun Life Financial Inc.’s unit after agreeing to policyholder protections sought by a New York regulator. Falcone’s publicly traded Harbinger Group bought Fidelity & Guaranty, the U.S. life and annuity unit of London-based Old Mutual Plc, for $350 million in 2011.

The securities and investment industry — a group that includes private-equity firms, life and health insurers — was the top contributor to Hatch’s campaign committee and Leadership Political Action Committee as of 2012, according to OpenSecrets.org. MetLife, the biggest U.S. life insurer, and the American Council of Life Insurers, a trade group, were listed as supporters of the bill in Hatch’s July 9 press release introducing it.

New York

“MetLife has been focused on the retirement income crisis for a number of years and applauds Senator Hatch for recognizing the importance of guaranteed streams of income in retirement that people can’t outlive,” John Calagna, a spokesman for the New York-based company, said in an e-mail.

Prudential, the second largest U.S. life insurer, declined to comment on Hatch’s proposal, according to Bob DeFillippo, a spokesman for the company.

Hatch’s proposal is a departure from how many retirement funds are currently managed in the U.S. Staff in the New York City comptroller’s Bureau of Asset Management, which oversee five funds for police, firefighters, teachers, school and civil- service workers, farm out asset management to more than 300 firms and don’t manage any assets internally. The pension funds don’t invest in annuity contracts to pay retiree benefits. The system has invested with investment-management units of insurers including Prudential, according to a report on its website.

Calpers Model

The city’s pension funds, the 11th largest in the U.S., gained 12.3 percent in fiscal year 2013, according to preliminary, unaudited results, Comptroller Liu said in a July 18 statement. The funds had about 57 percent of their assets in stocks, about 31 percent in bonds and the rest in assets such as private equity and hedge funds, according to its website.

The California Public Employees’ Retirement System, the largest U.S. pension, commits money to hundreds of external asset managers in addition to investment staff who manage assets, said spokesman Joe DeAnda. The fund doesn’t buy individual annuity contracts for workers. The money is invested as a pool and payouts determined by formulas depending on workers’ length of service and job type, according to DeAnda.

Calpers is reviewing Hatch’s proposal and doesn’t have a position on it at this time, DeAnda said. The pension plan had its portfolio invested in a diverse set of assets as of March 31, including about half in public equities, 12 percent in private equity and 8 percent in real estate, according to its website. The Calpers fund earned 12.5 percent in the 12 months ending June 30, according to a July 15 statement.

Executive Life

The collapse of insurance companies such as Executive Life illustrate that pension beneficiaries would be at risk of losing their payouts in retirement if the insurer behind their annuity contracts went out of business, said Teresa Ghilarducci, an economics professor at The New School in New York. Insurers are regulated by states, which vary in their standards, she said.

Executive Life issued group annuities and guaranteed investment contracts to pension plans and municipalities. The estimated loss for contract owners was $3.1 billion and policyholders recovered about 87 percent on average of their expected account values, according to a 2008 report by the California State Auditor.

Insurance companies that go out of business are taken over by a state’s insurance department. Guaranty associations pay the claims from payments required of solvent insurers and provide necessary funding if the policies are moved to a new insurer up to certain coverage limits, which can differ from state to state.

The switch to annuity contracts would carry a cost for workers, Harris of the Tax Policy Center said. Insurance companies on average take out 10 percent to 15 percent of contributions from a group of people to cover costs such as marketing and for taking on the risk, Harris said.

Annuities bought for groups generally have lower costs than those purchased individually. Institutional pricing can vary by an employer’s demographics such as gender, age and location of its workers as well as by the features in the contract including whether there are any payouts to survivors after death.

The argument that accumulating annuities will result in smaller benefits for workers is a myth, according to an e-mailed statement from Hatch’s office. The payouts under the plan can be just as generous and have a financial backstop from the state guaranty associations, according to the statement.

Hank Kim, the executive director of the National Conference on Public Employee Retirement Systems, said it costs 50 basis points to 76 basis points of assets invested to run public pensions. That’s lower than a for-profit insurance company could offer, he said.

“It sounds as if it’s a free lunch — and I really don’t believe in free lunches,” he said. “To say it would cost the same and you would get the exact same benefit, it really stretches the realm of credibility.”

© Copyright 2013 Bloomberg News. All rights reserved.

Source: NEWSmax.com

Hatch: Use Insurance Companies to End US Pension Crisis.


Image: Hatch: Use Insurance Companies to End US Pension Crisis

A powerful U.S. senator would like to use life insurance companies to help alleviate the funding crisis that has engulfed many public pensions.

Utah‘s Senator Orrin Hatch, the top-ranking Republican on the Finance Committee, will introduce legislation on Tuesday that would create a new public retirement plan in which insurance companies pay benefits through annuity contracts.

According to a summary of the bill provided to Reuters, an employer would pay a premium each year to a state-licensed insurer. Employees would then receive fixed income annuity contracts from the insurance company, “thereby building an annuitized pension year-by-year during their working lives” and making pension plan underfunding “not possible.”

Annuities function similarly to defined-benefit plans by paying set amounts in regular installments. The accumulation of annuity contracts would even out interest rate fluctuations, according to Hatch, who would also have life insurance companies competitively bid for them.

There is no official figure for how badly public pension plans are underfunded. Pew Center on the States estimates they are short more than $850 billion in total for future retirees’ benefits.

For years, states short-changed their retirement systems. When state and local revenues plunged during the 2007-09 recession, they cut contributions further. At the same time the financial crisis ravaged the earnings on retirement systems’ investments, which provide more than half of all pension funding.

Pension plan finances have improved in 2013, with states making greater contributions just as the stock market pushed pension assets to record levels. In 2012, pensions in aggregate had enough assets to cover 73 percent of their liabilities.

Still, worries about underfunding persist, primarily because the public workforce is maturing. Meanwhile, some pension reforms face political and legal resistance.

For at least three years, Hatch has sought a uniform solution to the public pension crisis. Like his Republican colleagues, he is concerned the federal government might have to intervene if the problem worsens. Others, including the International Monetary Fund, have said growth in pension spending could drag down the U.S. economy.

Hatch’s legislation would also put employees at small or start-up companies into annuities for retirement, as well as change the federal oversight of 401(k) retirement plans offered by most corporations and of Individual Retirement Accounts.

© 2013 Thomson/Reuters. All rights reserved.

Source: NEWSmax.com

Philadelphia Cops Eye Possible Arrest in Probe of Doctor Found Hogtied and Burning.


PHOTO: Police remove the body of a woman found burned to death in her basement on the 1700 block of Naudain St. in Center City, Jan. 21, 2013 in Philadelphia.
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Investigators in Philadelphia are following leads in the killing of a pediatrician found hogtied and on fire in the basement of her home, and an arrest could be made as early as Friday morning, ABC News sources said.

Police also reportedly had taken a person of interest into custody in the case, ABC News station WPVI in Philadelphia reported, though initially few details were available.

The developments came after investigators collected hours of surveillance video and canvassed the neighborhood where police on Monday found the body of Melissa Ketunuti, 35, a beloved doctor at Children’s Hospital of Philadelphia.

Ketunuti’s body was found Monday in the basement of her Graduate Hospital-area row house after her dog walker called 911. Her wrists and ankles were bound behind her back, and she was on fire, police said.

The pediatrician was fully clothed and there were no signs of sexual assault, sources said.

Investigators said she had been strangled with a rope around her neck. However they are awaiting the results of an autopsy to determine the cause of death.

PHOTO: Police remove the body of a woman found burned to death in her basement on the 1700 block of Naudain St. in Center City, Jan. 21, 2013 in Philadelphia.
Ron Tarver/AP Photo
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With no evidence of forced entry, police wondered whether she knew whoever attacked her.

“We don’t know if she walked in on individuals inside of her property,” Philadelphia police Capt. James Clark said. “We don’t know if it’s a known doer or an unknown doer.”

There was no clear motive, and nothing appeared to have been stolen. Police have questioned Ketunuti’s boyfriend, but he has not been declared a suspect.

“We haven’t ruled out anyone,” Clark said today.

The reward for information leading to the arrest and conviction of the person responsible for Ketunuti’s death has swelled to $35,000 after community groups contributed money. The total reward includes the $20,000 offered by the city of Philadelphia.

Police have been looking at surveillance tapes from the area hoping to spot the killer and have questioned area residents about what they saw that day.

The culprit will likely be close to home and someone Ketunuti knew, said ABC News consultant and former FBI agent Brad Garrett.

“This is extremely personal. I can’t think of anything more heinous or cold to do to another human being,” he said. “The boyfriend can provide all kinds of leads: who she knows, what problems she was having at work.”

Ketunuti lived alone on a quiet street and had been there for about three years.

“[She was] super pleasant, really nice,” one neighbor said. “Just super friendly.”

Ketunuti’s hospital issued a statement Tuesday that she was “a warm, caring, earnest, bright young woman with her whole future ahead of her,” adding that she will be deeply missed.

“It’s going to be just a horrible thing for her family,” a neighbor said. “She was just a very nice person, very full of life.”

Source: YAHOO NEWS.

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